During the current year, Blossom Construction trades an old crane that has a book value of $122,400 (original cost $190,400 less accumulated depreciation $68,000) for a new crane from Blue Manufacturing Co.

Question

Dana Walsh

Business

1 May, 23:05

During the current year, Blossom Construction trades an old crane that has a book value of $122,400 (original cost $190,400 less accumulated depreciation $68,000) for a new crane from Blue Manufacturing Co.

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Keagan · Answer 1

The journal entry would be

New Equipment (crane) $ 122,400 Dr

Depreciation Expense (old crane) $ 68,000 Dr

Old Equipment $ 190,400 Cr

As the price of the new equipment is not given the profit or loss cannot be estimated. the whole amount less depreciation is transferred to new equipment account. if depreciation is treated separately and not set off against the equipment the entry would be under the accrual basis of accounting

New Equipment (crane) $ 122,400 Dr

Depreciation Expense (old crane) $ 68,000 Dr

Old Equipment $ 122,400 Cr

Accumulated Depreciation $ 68,000 Cr